Southern Company reports third quarter earnings

30 Oct, 2013, 07:30 ET from Southern Company

ATLANTA, Oct. 30, 2013 /PRNewswire/ -- Southern Company today reported third quarter 2013 earnings of $852 million, or 97 cents per share, compared with earnings of $976 million, or $1.11 per share, in the third quarter of 2012.

For the nine months ended Sept. 30, 2013, Southern Company's earnings were $1.23 billion, or $1.41 per share, compared with earnings of $1.97 billion, or $2.26 per share, for the same period a year ago.

Earnings for the three months and nine months ended Sept. 30, 2013, include after-tax charges of $93 million (11 cents per share) and $704 million (81 cents per share), respectively, related to increased cost estimates for the construction of Mississippi Power's Kemper County project. Earnings for the nine months ended Sept. 30, 2013, also include a $16 million (2 cents per share) after-tax charge related to the restructuring of a leveraged lease investment. Earnings for the nine months ended Sept. 30, 2012, include $21 million (2 cents per share) of insurance recovery related to the March 2009 litigation settlement agreement with MC Asset Recovery, LLC.

Excluding these items, Southern Company earned $945 million, or $1.08 per share, in the third quarter of 2013, compared with earnings of $976 million, or $1.11 per share, during the third quarter of 2012.

For the first nine months of both 2013 and 2012, excluding these items, Southern Company earned $1.95 billion, or $2.24 per share. 

Earnings were negatively influenced by cooler-than-normal temperatures and unusually heavy rainfall in the third quarter of 2013 compared with the third quarter of 2012.

"During the past quarter, our service territory experienced its highest level of rainfall in nearly 100 years," said Thomas A. Fanning, Southern Company chairman, president and CEO. "At the same time, cooler temperatures prevailed across our territory. For instance, in metro Atlanta – where we would normally expect to see more than 100 hours of summer temperatures above 90 degrees – we only saw one such hour. This unique combination of circumstances resulted in one of the mildest southeastern summers in the last 20 years."

Third quarter 2013 operating revenues were $5.02 billion, compared with $5.05 billion for the same period in 2012, a decrease of 0.6 percent. Year-to-date 2013 revenues were $13.16 billion, compared with $12.83 billion for the same period in 2012, a 2.5 percent increase.

Kilowatt-hour sales to retail customers in Southern Company's four-state service area decreased 1.5 percent in the third quarter of 2013 compared with the third quarter of 2012. Residential and commercial energy sales decreased 5.3 percent and 1.3 percent, respectively, while industrial energy sales increased 2.6 percent.

For the year to date, retail sales decreased 0.9 percent compared with the same period in 2012. Residential and commercial energy sales decreased 1.4 percent and 1.5 percent, respectively, while industrial energy sales increased 0.4 percent.

Total energy sales to Southern Company's customers in the Southeast, including wholesale sales, decreased 2.9 percent in the third quarter of 2013 compared with the same period in 2012. For the year to date, total energy sales decreased 1.2 percent compared with the same period in 2012.

Southern Company's financial analyst call will begin at 1 p.m. Eastern time today, during which Fanning and Chief Financial Officer Art P. Beattie will discuss earnings and provide a general business update. Investors, media and the public may listen to a live webcast of the call and view associated slides at http://investor.southerncompany.com/events.cfm. A replay of the webcast only will be available at the site for 12 months.

Southern Company has also posted on its website detailed financial information on its third quarter performance. These materials are available at www.southerncompany.com.

With 4.4 million customers and nearly 46,000 megawatts of generating capacity, Atlanta-based Southern Company (NYSE: SO) is the premier energy company serving the Southeast through its subsidiaries. A leading U.S. producer of clean, safe, reliable and affordable electricity, Southern Company owns electric utilities in four states and a growing competitive generation company, as well as fiber optics and wireless communications. Southern Company brands are known for energy innovation, excellent customer service, high reliability and retail electric prices that are below the national average. Southern Company and its subsidiaries are leading the nation's nuclear renaissance through the construction of the first new nuclear units to be built in a generation of Americans and are demonstrating their commitment to energy innovation through the development of a state-of-the-art coal gasification plant. Southern Company has been recognized by the U.S. Department of Defense and G.I. Jobs magazine as a top military employer and listed by DiversityInc as a top company for Blacks. The company received the 2012 Edison Award from the Edison Electric Institute for its leadership in new nuclear development, was named Electric Light & Power magazine's Utility of the Year for 2012 and is continually ranked among the top utilities in Fortune's annual World's Most Admired Electric and Gas Utility rankings. Visit our website at www.southerncompany.com.

Southern Company

Financial Highlights

(In Millions of Dollars Except Earnings Per Share)

Three Months Ended

September

Year-to-Date

September

2013

2012

2013

2012

Consolidated Earnings–As Reported

(See Notes)

Traditional Operating Companies

$

766

$

908

$

1,100

$

1,797

Southern Power

85

68

142

144

Total

851

976

1,242

1,941

Parent Company and Other

1

(12)

26

Net Income–As Reported

$

852

$

976

$

1,230

$

1,967

Basic Earnings Per Share

$

0.97

$

1.11

$

1.41

$

2.26

  Average Shares Outstanding (in millions)

878

876

874

872

  End of Period Shares Outstanding (in millions)

882

875

Three Months Ended

September

Year-to-Date

September

2013

2012

2013

2012

Consolidated Earnings–Excluding Items

(See Notes)

Net Income–As Reported

$

852

$

976

$

1,230

$

1,967

Estimated Loss on Kemper IGCC

93

704

Leveraged Lease Restructure

16

MC Asset Recovery Insurance Settlement, net

(21)

Net Income–Excluding Items

$

945

$

976

$

1,950

$

1,946

Basic Earnings Per Share–Excluding Items

$

1.08

$

1.11

$

2.24

$

2.24

Notes

- For the three months ended September 30, 2013 and 2012, dilution does not change basic earnings per share by more than 1 cent and is not material. For the nine months ended September 30, 2013 and 2012, dilution does not change basic earnings per share by more than 3 cents and is not material.

- The estimated probable losses relating to Mississippi Power Company's construction of the integrated coal gasification combined cycle facility in Kemper County, Mississippi (Kemper IGCC) significantly impacted the presentation of earnings and earnings per share for the three and nine months ended September 30, 2013 and similar charges are not expected to occur with any regularity in the future, although it is possible such charges could recur.

-The charge related to the restructuring of a leveraged lease investment that was completed on March 1, 2013 impacted the presentation of earnings and earnings per share for the nine months ended September 30, 2013 and similar charges are not expected to occur with any regularity in the future.

- Earnings for the nine months ended September 30, 2012 include an insurance settlement related to the March 2009 litigation settlement with MC Asset Recovery, LLC and similar insurance recoveries are not expected to occur with any regularity in the future.

- Certain prior year data has been reclassified to conform with current year presentation.

- All figures in this earnings release are preliminary and remain subject to the completion of normal quarter-end accounting procedures and adjustments, which could result in changes to these preliminary results.  In addition, certain classifications and rounding may be different from final results published in the Form 10-Q.

 

Southern Company

Significant Factors Impacting EPS

Three Months Ended

September

Year-to-Date

September

2013

2012

Change

2013

2012

Change

Consolidated Earnings Per Share–

As Reported (See Notes)

$

0.97

$

1.11

$

(0.14)

$

1.41

$

2.26

$

(0.85)

Significant Factors:

Traditional Operating Companies

(0.16)

(0.80)

Southern Power

0.02

Parent Company and Other

(0.04)

Increase in Shares

(0.01)

Total–As Reported

$

(0.14)

$

(0.85)

Three Months Ended

September

Year-to-Date

September

2013

2012

Change

2013

2012

Change

Consolidated Earnings Per Share–

Excluding Items (See Notes)

$

1.08

$

1.11

$

(0.03)

$

2.24

$

2.24

$

Total–As Reported

(0.14)

(0.85)

Estimated Loss on Kemper IGCC

0.11

0.81

Leveraged Lease Restructure

0.02

MC Asset Recovery Insurance Settlement

0.02

Total–Excluding Items

$

(0.03)

$

Notes

- For the three months ended September 30, 2013 and 2012, dilution does not change basic earnings per share by more than 1 cent and is not material. For the nine months ended September 30, 2013 and 2012, dilution does not change basic earnings per share by more than 3 cents and is not material.

- The estimated probable losses relating to Mississippi Power Company's construction of the integrated coal gasification combined cycle facility in Kemper County, Mississippi (Kemper IGCC) significantly impacted the presentation of earnings and earnings per share for the three and nine months ended September 30, 2013 and similar charges are not expected to occur with any regularity in the future, although it is possible such charges could recur.

-The charge related to the restructuring of a leveraged lease investment that was completed on March 1, 2013 impacted the presentation of earnings and earnings per share for the nine months ended September 30, 2013 and similar charges are not expected to occur with any regularity in the future.

- Earnings for the nine months ended September 30, 2012 include an insurance settlement related to the March 2009 litigation settlement with MC Asset Recovery, LLC and similar insurance recoveries are not expected to occur with any regularity in the future.

- Certain prior year data has been reclassified to conform with current year presentation.

- All figures in this earnings release are preliminary and remain subject to the completion of normal quarter-end accounting procedures and adjustments, which could result in changes to these preliminary results.  In addition, certain classifications and rounding may be different from final results published in the Form 10-Q.

Southern Company

EPS Earnings Analysis

Three Months Ended September 2013

Cents

Description

Retail Sales

2

Retail Revenue Impacts

(7)

Weather

(2)

Non-Fuel O&M

(2)

Depreciation and Amortization

2

Other Income and Deductions

1

Interest Expense

(5)¢

Total Traditional Operating Companies

2

Southern Power

(3)¢

Total Change in QTD EPS (x-Items)

(11)

Estimated Loss on Kemper IGCC

(14)¢

Total Change in QTD EPS (As Reported)

Notes

- The estimated probable loss relating to Mississippi Power Company's construction of the integrated coal gasification combined cycle facility in Kemper County, Mississippi (Kemper IGCC) significantly impacted the presentation of earnings and earnings per share for the three months ended September 30, 2013 and similar charges are not expected to occur with any regularity in the future, although it is possible such charges could recur.

- All figures in this earnings release are preliminary and remain subject to the completion of normal quarter-end accounting procedures and adjustments, which could result in changes to these preliminary results.  In addition, certain classifications and rounding may be different from final results published in the Form 10-Q.

 

Southern Company

Consolidated Earnings

As Reported

(In Millions of Dollars)

Three Months Ended September

Year-to-Date

September

2013

2012

Change

2013

2012

Change

Income Account-

Retail Revenues-

Fuel

$

1,435

$

1,445

$

(10)

$

3,830

$

3,709

$

121

Non-Fuel

2,884

2,934

(50)

7,407

7,359

48

Wholesale Revenues

520

497

23

1,406

1,261

145

Other Electric Revenues

166

157

9

477

459

18

Non-regulated Operating Revenues

12

16

(4)

40

46

(6)

Total Revenues

5,017

5,049

(32)

13,160

12,834

326

Fuel and Purchased Power

1,725

1,717

8

4,583

4,362

221

Non-fuel O & M

928

906

22

2,849

2,817

32

MC Asset Recovery Insurance Settlement

(19)

19

Depreciation and Amortization

480

449

31

1,422

1,335

87

Taxes Other Than Income Taxes

243

237

6

710

690

20

Estimated Loss on Kemper IGCC

150

150

1,140

1,140

Total Operating Expenses

3,526

3,309

217

10,704

9,185

1,519

Operating Income

1,491

1,740

(249)

2,456

3,649

(1,193)

Allowance for Equity Funds Used During Construction

53

39

14

139

102

37

Leveraged Lease Income (Loss)

5

5

(11)

16

(27)

Interest Expense, Net of Amounts Capitalized

202

218

(16)

628

649

(21)

Other Income (Expense), net

(10)

(4)

(6)

(20)

(4)

(16)

Income Taxes

468

569

(101)

657

1,098

(441)

Net Income

869

993

(124)

1,279

2,016

(737)

Dividends on Preferred and Preference Stock of Subsidiaries

17

17

49

49

NET INCOME AFTER DIVIDENDS ON PREFERRED AND PREFERENCE STOCK

$

852

$

976

$

(124)

$

1,230

$

1,967

$

(737)

Notes

- Certain prior year data has been reclassified to conform with current year presentation.

- All figures in this earnings release are preliminary and remain subject to the completion of normal quarter-end accounting procedures and adjustments, which could result in changes to these preliminary results.  In addition, certain classifications and rounding may be different from final results published in the Form 10-Q.

Southern Company

Kilowatt-Hour Sales

(In Millions of KWHs)

Three Months Ended September

Year-to-Date September

As Reported

(See Notes)

2013

2012

Change

Weather Adjusted Change

2013

2012

Change

Weather Adjusted Change*

Kilowatt-Hour Sales-

Total Sales

51,040

52,586

(2.9)

%

139,418

141,074

(1.2)

%

Total Retail Sales-

43,454

44,137

(1.5)

%

1.0

%

118,922

119,945

(0.9)

%

(0.1)

%

Residential

14,653

15,479

(5.3)

%

(0.3)

%

38,770

39,315

(1.4)

%

(0.5)

%

Commercial

14,836

15,032

(1.3)

%

1.1

%

40,108

40,734

(1.5)

%

%

Industrial

13,738

13,394

2.6

%

2.6

%

39,363

39,206

0.4

%

0.4

%

Other

227

232

(1.9)

%

(1.6)

%

681

690

(1.4)

%

(1.4)

%

Total Wholesale Sales

7,586

8,449

(10.2)   %

N/A

20,496

21,129

(3.0)

%

N/A

Notes

* Also reflects reclassification of January 2012 KWH sales among customer classes consistent with actual advanced meter data. Use of actual advanced meter data was implemented during the first quarter of 2012.

Southern Company

Financial Overview

As Reported

(In Millions of Dollars)

Three Months Ended

September

Year-to-Date

September

2013

2012

% Change

2013

2012

% Change

Consolidated –

Operating Revenues

$

5,017

$

5,049

(0.6)

%

$

13,160

$

12,834

2.5

%

Earnings Before Income Taxes

1,337

1,562

(14.4)

%

1,936

3,114

(37.8)

%

Net Income Available to Common

852

976

(12.7)

%

1,230

1,967

(37.5)

%

Alabama Power –

Operating Revenues

$

1,604

$

1,637

(2.0)

%

$

4,304

$

4,230

1.7

%

Earnings Before Income Taxes

442

474

(6.8)

%

992

1,015

(2.3)

%

Net Income Available to Common

258

280

(7.9)

%

572

591

(3.2)

%

Georgia Power –

Operating Revenues

$

2,484

$

2,498

(0.6)

%

$

6,408

$

6,263

2.3

%

Earnings Before Income Taxes

790

843

(6.3)

%

1,579

1,558

1.3

%

Net Income Available to Common

487

525

(7.2)

%

966

987

(2.1)

%

Gulf Power –

Operating Revenues

$

399

$

422

(5.3)

%

$

1,097

$

1,108

(1.0)

%

Earnings Before Income Taxes

75

80

(5.7)

%

168

172

(2.7)

%

Net Income Available to Common

45

48

(6.3)

%

99

103

(4.1)

%

Mississippi Power –

Operating Revenues

$

325

$

305

6.5

%

$

878

$

800

9.7

%

Earnings Before Income Taxes

(56)

77

N/M

(843)

159

N/M

Net Income Available to Common

(24)

55

N/M

(490)

115

N/M

Southern Power –

Operating Revenues

$

365

$

355

2.8

%

$

975

$

894

9.0

%

Earnings Before Income Taxes

103

102

1.2

%

180

220

(18.4)

%

Net Income Available to Common

85

68

24.5

%

142

144

(1.4)

%

N/M - not meaningful

Notes

- Mississippi Power Company restated its 2012 financial statements to reflect a pre-tax charge to income for the estimated probable loss on Kemper IGCC of $78 million ($48 million after tax) in 2012. Southern Company evaluated the portion of the estimated probable loss related to 2012 and concluded it was not material to Southern Company. Therefore, Southern Company reflected the pre-tax charge to income for this portion of the estimated probable loss related to 2012 in the first quarter 2013.

- Certain prior year data has been reclassified to conform with current year presentation.

- All figures in this earnings release are preliminary and remain subject to the completion of normal quarter-end accounting procedures and adjustments, which could result in changes to these preliminary results.  In addition, certain classifications and rounding may be different from final results published in the Form 10-Q.

SOURCE Southern Company



RELATED LINKS

http://www.southerncompany.com